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To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.ejor.2006.04.002 Byline: Hisashi Kurata (a), Dong-Qing Yao (b), John J. Liu (c) Keywords: Supply chain management; Pricing; Brand management; Channel competition; Comparative statics Abstract: This paper analyzes channel pricing in multiple distribution channels under competition between a national brand (NB) and a store brand (SB), where an NB can be distributed both through a direct channel (e-channel) and an indirect channel (local stores) but an SB can be distributed only through an indirect channel. We first explore cross-brand and cross-channel pricing policies. Formulating the problem as a Nash pricing game, we reach two findings: (1) brand loyalty building is profitable for both an NB and an SB; and (2) marketing decisions are more restrictive for an NB channel than they are for the SB channel. We next assess supply chain coordination and reach two findings: (1) wholesale price change does not coordinate the supply chain and (2) an appropriate combination of markup and markdown prices can achieve both supply chain coordination and a win-win outcome for each channel. Author Affiliation: (a) School of Business Administration, The University of Wisconsin-Milwaukee, 3202 N. Maryland Ave., Milwaukee, WI 53201, USA (b) College of Business and Economics, Towson University, 8000 York Road, Towson, MD, 21252-0001, USA (c) Department of Logistics, Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong Article History: Received 10 March 2005; Accepted 3 April 2006

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.ejor.2006.01.009 Byline: Hisashi Kurata (a), John J. Liu (b) Keywords: Marketing-operations interface; Promotion; Inventory decision; Markov-switching model; Supply chain management Abstract: In considering the retailer-supplier supply chain, this paper analyzes how a retailer reasonably decides both the depth and frequency of the price discount promotion including or excluding a supplier's inventory decision. Assuming that the promotion frequency used by the retailer is probabilistic, we model a promotion-inventory decision under an AR(1) demand with a Markov switching promotion regime. After obtaining the optimal promotion plan, our analysis also considers the behavior of the optimal promotion decision; the retailer's price format selection, either an Every-Day-Low-Price policy (EDLP) or a Promotion policy (HiLo); and the impact of information sharing of promotion status on the system's performance. Our results suggest that a retailer tends to overpromote if inventory cost is excluded in its promotion decision, that increasing the market share is a preferable action for both the retailer and the supplier, that total margin and price-elasticity play an important role in selecting the price format, and that the profitability for a supplier of sharing promotion information depends on the transition probabilities of the Markov switching regime. Author Affiliation: (a) School of Business Administration, University of Wisconsin-Milwaukee, 3202 N. Maryland Avenue, Milwaukee, WI 53201, USA (b) Department of Logistics, Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong Article History: Received 23 August 2004; Accepted 8 January 2006

A modeling framework is developed to examine the effect of retail-pricing policies on the choice between make-to-stock and make-to-order in operations management.